Microsoft (Nasdaq: MSFT) has grown from a simple software company to become a global tech titan. Based in Redmond, Washington, it was founded by Bill Gates and Paul Allen in 1975. After ending his day-to-day duties at the company in 2008, Gates remains the company's non-executive chairman, while Steve Ballmer serves as president and CEO. Microsoft ranked 136th in the 2008 Fortune Global 500, with more than $51 billion in revenue and roughly $14 billion in profits.
After only two years at Harvard University, Gates dropped out in 1975 to create and sell software with his friend and business partner Paul Allen. The company scored its first major success in 1980, when IBM enlisted Microsoft to provide the software for its fledgling line of personal computers. Working off a preexisting product purchased from another programmer, Microsoft crafted DOS, which would become the premier operating system for the home PC revolution.
In 1985, Microsoft released its first version of the Windows operating system. Its graphical interface drew legal attacks from Apple, which had debuted its own Macintosh OS the year before. A cleverly crafted licensing agreement not only smoothed out Apple's initial concerns, but also laid the legal groundwork for Microsoft to make Windows even more like the Mac in future incarnations, despite Apple's protests.
Windows' popularity only grew with the release of version 3.0 in 1990, and by the time Windows 95 arrived in 1995, Microsoft absolutely dominated the PC desktop. But new threats to the company were beginning to emerge, most notably on the World Wide Web. To rival the then-popular Netscape Navigator browser, Microsoft released its own Internet Explorer in August 1995.
Its close integration with the Windows operating system eventually made Internet Explorer the Web's most widely used browser, but it also got Microsoft into hot water with the U.S. Department of Justice. In 1997, the DOJ filed an antitrust complaint against Microsoft, demanding that it decouple Internet Explorer from Windows. The case dragged on for years; despite a 2000 ruling declaring Microsoft an "abusive monopoly," most of the initial judge's punitive measures were thrown out on appeal, and the case was quietly settled in 2001. The company fared worse in the EU, which also ruled against Microsoft in a 2004 antitrust judgment, slapping Microsoft with a nearly $800 million fine and obliging it to sell various differently equipped versions of Windows XP abroad.
In 2001, Microsoft entered the video game wars with its Xbox console, in direct competition with Sony and Nintendo, following up with the next-generation Xbox 360 in late 2005. As part of its Xbox initiative, Microsoft set up its own game studio, and now publishes popular titles such as the Halo and Gears of War series for both Xbox and (in some cases) Windows PCs.
In recent years, Microsoft's fortunes have taken a slight turn for the worse. Its Zune media player, launched to great fanfare in November 2006, has not been the competition for Apple's iPod the company hoped for, and the Windows Vista OS it debuted in 2007 met with a particularly chilly reception. Many users reportedly preferred to stick with, or switch back to, the previous version, Windows XP.
Microsoft's efforts to loom as large on the Web as it does in software have also been consistently stymied by Google. In 2008, Microsoft briefly attempted to buy Yahoo! in an attempt to rise from third to second place in online search, but squabbles over pricing scuttled the negotiations.
Still, Microsoft forges ahead. In 2008, the company announced Windows 7, tentatively slated for release in 2010, and promoted efforts to enter the growing field of cloud computing. After resigning his CEO post in 1998, Gates finally stepped away from day-to-day operations in 2008 to concentrate on global philanthropy through the Bill and Melinda Gates Foundation.
Microsoft operates three core business divisions:
- Platform Products and Services includes the Windows operating system, Microsoft's line of software for servers, and its various online efforts, including MSN Search, MSN Hotmail, and Windows Live Messenger.
- Business handles the development of the mighty Microsoft Office suite of productivity software.
- Entertainment and Devices includes mobile versions of the Windows OS; the company's PC and console gaming operations, including the Xbox 360; Microsoft's line of keyboards, mice, webcams, and other PC peripherals; and yes, the Zune.
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